One of the side effects of the transfer tax in Toronto is people don't move and renovate like CRAZY instead. Its nuts!!! But I think how can you stop a foreign national from starting a Canadian company to hold his property?
BC could get sued for there 15% tax on Foreign buyers (properties)
- Thread starter kono
- Start date
If they bring the tax to Toronto, it should be accompanied by a crystal clear plan on how the surplus money will be spent. Otherwise it will just be a bureaucratic windfall, and nobody other than government officials will benefit - not families, not first time home buyers, not affordable housing initiatives. Nobody.
Suing a foreign buyer who is likely practically judgment proof for anything more than the deposit seems about as useless as suing the seller for the return of the deposit.
The execution was stupid. The tax itself maybe can be defended but it was brain-dead not to base it on the closing date rather than the signing date.
Should have applied to all deals signed with a deposit from the day it was announced.
That way nobody gets dinged without knowing about the tax when they paid their deposit.
You said it like it is captain.
For 5,000 fucking years paying tax!
Even today, they finally get rid of the farm tax, only after 2,000 years.
At least, Chinese are patient.
China´s 800m peasants to escape yoke of farm tax
http://en.nsd.edu.cn/article.asp?articleid=6644
As for the housing bubble.
Sooner or later, they have to raise interests rates, which are at basically zero.
This kind of monetary policy, just recreating what Professor Micheal Hudson talks about the FIRE, Finance, Insurance, Real Estate, all going up and people in those industries making out like bandits.
The zero yield and loose money, where else is it going to go?
Sooner or later, they have to raise interests rates, which are at basically zero.
This kind of monetary policy, just recreating what Professor Micheal Hudson talks about the FIRE, Finance, Insurance, Real Estate, all going up and people in those industries making out like bandits.
The zero yield and loose money, where else is it going to go?
It will probably hurt home values: any time you increase costs to any sector of the buying market, you're going to hurt values over baseline. Whether that will result in values actually going down or just in values not going up as fast as they otherwise would have, that's another question. I don't know the Vancouver market well enough to guess.
As far as value for a home, you DO see the value in quite a few other ways. If you stay in the home for any length of time, you see a substantial savings vs renting. If you have a fixed rate mortgage (high recommended), ten years from now you'll still be paying roughly the same mortgage that you're paying now. If you were renting for that entire time, your rent would have gone up considerably. Also, living in a high value market like Vancouver or Toronto gives you leverage: when you sell, it gives you the option of moving to a lower priced area with considerably greater resources. Even if you're not fully paid off on your mortgage, selling a $1M home and realizing $700k in proceeds allows you to buy multiple very nice homes in, say, Orlando, Florida. You retire to Florida in a home that is larger, with a swimming pool, that is worth about $200k USD and you're still able to buy two more similar homes in that neighborhood with no mortgage and realize passive rental income from those properties.
If you're flexible in the age of the global economy, you can make it work for you.
The idea IS that first time homebuyers will benefit as they won't have to compete with well heeled foreigners bidding up our real estate due to our weak loonie. In fact 15% only rolls back half the currency discount foreigners have.
Offshore foreign capital is responsible for a good part of the multi billion dollar construction boom in Toronto and Vancouver, a situation not seen anywhere else in North America at this time. Canada depends on immigration and foreign investment to survive. The BC 15% tax move is only to appease disgruntled BC residents who were long ago left in the dust. Politicians like the milf Christy Clark are looking only at ways to get stay in power or get re-elected. BC's economy will be will be affected more by the death of their illegal cannabis business than any foreign investments. Why did it take so long for the BC government to take action?
Interesting sidebar: from the years 1950 - 2000, Canadians saved more money by having a variable rate mortgage than fixed rate mortgage 90% of the time. This was according to a York University study released in 2001 called Floating Your Way To Prosperity.
Granted, we're living in unique times (i.e. record low interest rates), so it may be better to have a fixed mortgage rate at this time.
http://business.financialpost.com/p...ncouvers-property-tax-on-foreigners-wont-work
According to this article, the property tax wouldn't work because the issue is with housing supply, not inflated demand...
What he doesn't mention is that this tax money is going towards social housing which should alleviate the supply issue. Just letting this market go on its own with no tax like this is stupid. Builder's aren't stupid, they will only build when there is a shortage. Having more and more houses will just make builders slow down or stop completely until there is a shortage again. The only solution is a crash in housing or social housing. And if they build too much social housing the builders die out.
As for mortgage rates banks are offering me higher and higher rates each year. Just this week I find out its gone up 0.1%. The year before was 0.05%.
http://www.cbc.ca/news/business/this-week-in-business-1.3709188
Not only are they saying Toronto's market might heat up even more from this tax but also Ottawa.
According to this article, the property tax wouldn't work because the issue is with housing supply, not inflated demand...
What he doesn't mention is that this tax money is going towards social housing which should alleviate the supply issue. Just letting this market go on its own with no tax like this is stupid. Builder's aren't stupid, they will only build when there is a shortage. Having more and more houses will just make builders slow down or stop completely until there is a shortage again. The only solution is a crash in housing or social housing. And if they build too much social housing the builders die out.
As for mortgage rates banks are offering me higher and higher rates each year. Just this week I find out its gone up 0.1%. The year before was 0.05%.
http://www.cbc.ca/news/business/this-week-in-business-1.3709188
Not only are they saying Toronto's market might heat up even more from this tax but also Ottawa.
They say its going to affect MTL too but I doubt it. Usually when they do go to Montreal its for tourism not for investment and they use Quebec's investor program to immigrate to BC. They just loan Quebec 800K then once they are PR status they fly to BC and buy a home. I think after Ontario gets the tax then they will go to Quebec as a last resort and only the launderers will go, none of them will go to live there because its so different.
Don't take up law as a career
An EMPLOYEE of a builder is NOT REQUIRED to disclose any kind of closing costs
You are confusing them with a REALTOR who have an entirely different set of rules
Either way you can not disclose something before it happens (lol) and no sane Realtor would try to predict exact numbers (as shit like property tax rates, levys, and mortgage rates can change by quite a considerable margin every year)
Builder won't give a shit either
They have the deposit in bank (and foreign buyers required to pay more than Canadians)
Now can resell unit for higher price based on todays values
Everyone seems fixated on interest rate
Most investors (excluding small time residential landlords) are far more interested in the cap rates
I don't see the bubble bursting anytime soon, at least not in the GTA.
The key reason why the GTA is absurdly going up in value really comes down to a handful of factors:
- Super low mortgage rates. Everyone should be paying somewhere around 2.00 - 2.50%. But even if you locked in at 3.00% that's still a great deal
- Tons of people moving into the GTA. What's the net change every year? Something like +100k? That's a lot
- Most new developments are condos. Great for starters or single people, BUT...... the key reason why homes are zooming is because some people don't want to live in a condo. That's fine, but there's not many detached homes being built unless you want to live an hour out of town. So you have to pay up. That sketchy home with 60 year pipes, faulty wiring, a basement where every 6ft guy bangs their head on the ceiling, and looks like has never got a fresh coat of paint, is probably worth 5x what it was 20 years ago because some people have to have a yard and driveway. That's fine. But it's a sellers market. You want that front and backyard and want to still live reasonably close to the Toronto hub? Well, then pay up. Or, move to a modestly priced home..... 40 km away
The biggest bubble burster is if somehow mortgage rates creep up to let's say 4.00-5.00%. A 2.00% difference vs. current rates doesn't sound like a lot, but homes are worth so much now with people having big mortgages that a $500,000 mortgage at 2.00% more is a lot of extra costs. Some people won't be able to carry the load. That's where it would fall. But for the past 6 years, interests rates have FALLEN.
The key reason why the GTA is absurdly going up in value really comes down to a handful of factors:
- Super low mortgage rates. Everyone should be paying somewhere around 2.00 - 2.50%. But even if you locked in at 3.00% that's still a great deal
- Tons of people moving into the GTA. What's the net change every year? Something like +100k? That's a lot
- Most new developments are condos. Great for starters or single people, BUT...... the key reason why homes are zooming is because some people don't want to live in a condo. That's fine, but there's not many detached homes being built unless you want to live an hour out of town. So you have to pay up. That sketchy home with 60 year pipes, faulty wiring, a basement where every 6ft guy bangs their head on the ceiling, and looks like has never got a fresh coat of paint, is probably worth 5x what it was 20 years ago because some people have to have a yard and driveway. That's fine. But it's a sellers market. You want that front and backyard and want to still live reasonably close to the Toronto hub? Well, then pay up. Or, move to a modestly priced home..... 40 km away
The biggest bubble burster is if somehow mortgage rates creep up to let's say 4.00-5.00%. A 2.00% difference vs. current rates doesn't sound like a lot, but homes are worth so much now with people having big mortgages that a $500,000 mortgage at 2.00% more is a lot of extra costs. Some people won't be able to carry the load. That's where it would fall. But for the past 6 years, interests rates have FALLEN.
Canadian unemployment is rising as fast as home prices. Unless foreign money keeps propping up the market I don't see how that is sustainable.
That said, I'm not selling my property in Toronto, but only because I plan to own it for the next twenty years. If I was trying to time the market I'd sell now.
That said, I'm not selling my property in Toronto, but only because I plan to own it for the next twenty years. If I was trying to time the market I'd sell now.
This Moody's response is a dumbass amateurish answer. Ever since they and S&P rating agency screwed up with the US subprime you can safely ignore whatever they say. Always client driven.
At the every fundamental core it is partly true supply is the solution. But you can't generate adequate supply in a year or two to satisfy all the pent up demand so a prohibitive tax is needed to curb the escalating prices and continuing speculating and flipping. Plus the affluent hot money coming in are NOT interested in the unestablished suburbs but in the prime areas and established suburbs. The latter two are unlikely to see any material supply in years to come.
Moody's comment Is just like saying the TSX and Dow Jones are at/near records high and will continue to move up because there are more buyers (demand) than sellers (lack of supply).
